UTAO questions Portugal's 2027 employment and price forecasts

The Technical Unit for Budgetary Support (UTAO) has expressed doubts regarding the Portuguese government's employment and price projections included in the 2027 State Budget proposal.

UTAO notes that the projected 1.4% employment growth for 2027 is difficult to reconcile with the recent slowdown in net migration. While the Ministry of Finance anticipates a 1.3% growth in the active population for 2027, recent data shows the average quarterly increase in the active population dropped from 28,000 in 2025 to 10,000 in 2026. This discrepancy suggests that if employment growth fails to meet targets, tax and social security revenues could fall below expectations.

Additionally, the unit questioned the inflation forecast of 2.3% for 2027. The Public Finance Council (CFP) considers this projection inconsistent with the government's own technical assumptions, noting that the Ministry of Finance assumes a higher oil price of $86 per barrel compared to other institutions, yet projects inflation levels similar to those of the IMF and European Commission.